A simples guide

Instant access savings accounts

Everybody wants to earn interest on their savings, but most of us also need access to our money. Effectively we want the best of both worlds and while that is not always easy to achieve, an Instant Access Savings Account is a potential option.

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What is an Instant Access Savings Account?

These accounts are designed to allow instant access to your savings as they’re not locked away, but you can still earn interest.

Whilst the specifics of accounts vary from bank to bank, the essential concept is the same. They all offer cash withdrawal over the counter, from an ATM with a card, online transfers and more. Some banks even offer a tiered interest rate reward, which means that you get a higher rate of interest when you have more money in the account.

These interest rates don’t tend to be as high as they can be in a locked in savings account (fixed), but that’s the price you pay for instant access to your money. In many ways, you can take out money just as easily as you can from a current account. There is usually no penalty for taking your funds out and you can have a card operational in a very similar manner as your current account.

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What are the benefits of an instant access savings account?

An instant access savings account provides the opportunity to take advantage of building interest on your spare cash   without having to lock in funds. Whilst you will most likely achieve a lower rate, this opens up opportunities for people who cannot afford to lock in funds to build interest.

Opening an instant access savings account could also serve as a trial run before taking the commitment of locking your funds away to earn more interest. 

What do I need to open an instant access savings account?

You can usually open one of these accounts with just £1, so it’s a good way to get started  Just remember you’ll need things like your ID and proof of address when you open your account – check with your bank or building society for their specific requirements.

So it’s a savings account instant access for everyone then? Well, not quite. The interest rates are no match for a more restrictive savings account so if you can afford to lock your savings away then you could get a better return. Also the rates on these accounts aren’t fixed so if the Bank of England base rate does drop the rate on this account could also decrease (on the plus side if it goes up so could your savings rate!)

You can also use your instant access savings account together with a locked in savings account. The biggest concern that we share when locking in funds is, what happens if I need that money soon? By putting aside some money in an instant access savings account initially, you can make sure you always have a certain amount that you can access at any time. Once you’ve got this, any more money you have to save can go into a higher interest rate account that locks away your funds so you can earn more on your savings.  

To summarise, an instant access savings account is a solution for individuals looking to save money without committing their funds into a locked balance. Whilst you are compromising the interest rate that you will receive, being able to access your funds as and when you need will offer more comfort.

You can compare instant access savings accounts with us, assessing leading providers of savings accounts to find the best policy and interest rate available to you.

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